December’s consumer and producer prices; retail sales, industrial production, & new home construction; November’s business inventories

Major agency reports that were released ​last week included the December Consumer Price Index, the December Producer Price Index, and the December Import-Export Price Index, all from the Bureau of Labor Statistics (BLS), the Advance Retail Sales Report for December and the accompanying Business Sales and Inventories report for November from the Census Bureau, the December report on Industrial Production and Capacity Utilization from the Fed, and the New Residential Construction report for December (pdf) from the Census Bureau…

The week also saw the release of the first two regional Fed manufacturing surveys for January: the Empire State Manufacturing Survey from the New York Fed, which covers all of New York state, one county in Connecticut, Puerto Rico and northern New Jersey, reported their headline general business conditions index fell from +20.2 in November and from +2.1 in December to –12.6 in January, meaning that a significant plurality of Second District manufacturers are ​now seeing deteriorating business conditions this month, and the Philadelphia Fed Manufacturing Survey, covering most of Pennsylvania, southern New Jersey, and Delaware, which reported its broadest diffusion index of manufacturing business conditions jumped from a revised reading of -10.9 in December to +44.3 in January, the largest monthly increase since June 2020 and its highest reading since April 2021, as nearly 51 percent of the District’s firms reported increases in manufacturing activity (up from 19 percent last month), far exceeding the 7 percent that reported decreases (down from 30 percent), while 41 percent of the District’s firms reported no change in current activity…

Consumer Prices Rose 0.4% in December on Higher Prices for Vehicles, Fuel, and Rent

The consumer price index was 0.4% higher in December, as higher prices for rent, gasoline, gas utility service, new and used vehicles, vehicle insurance, airline fares, and recreational services were partly offset by lower prices for lodging, furniture, appliances, nonprescription drugs, recreational goods, and information technology commodities including smartphones….the Consumer Price Index Summary from the Bureau of Labor Statistics indicated that the weighted average of seasonally adjusted prices for consumer goods and services was 0.4% higher in December, after being 0.3% higher in November, 0.2% higher in October, 0.2% higher in September. 0.2% higher in August, 0.2% higher in July, 0.1% lower in June, unchanged in May, 0.3% higher in April, 0.4% higher in March, 0.4% higher in February, 0.3% higher in January, and 0.2% higher in December of last year…

The unadjusted CPI-U index, which was originally set to have prices of the 1982 to 1984 period equal to 100, rose from 315.493 in November to 315.605 in December, which left it statistically 2.888% higher than the index reading of 306.746 from November of last year, which is reported as a 2.9% year over year increase, more than the 2.7% year over year increase that was reported for November, with that widely cited year over year increase reflecting the effect of last December’s ​+0.2% increase dropping out of the comparison and being replaced by the current month’s +0.4%….with food prices higher and energy prices much higher, seasonally adjusted core prices, which exclude both food and energy, were up by 0.2% for the month, as the unadjusted core price index rose from 321.947 to 322.007, which left the core index 3.238% ahead of its year ago reading of 311.907, which is reported as a 3.2% year over year increase, less than the 3.3% year over year core price increase that was reported for November, and well below the 6.6% annual increase reported for September 2022, which had been the largest annual increase in core prices in forty years..

The volatile seasonally adjusted energy price index was 2.6% higher in December, after being 0.2% higher in November, unchanged in October, 1.9% lower in September, 0.8% lower in August, and after being unchanged in July, after falling 2.0% in both May and June, but after rising by 1.1% in April, by 1.1% in March and by 2.3% in February, but after falling by 0.9% last January, and by 0.2% last December, and is still 0.5% lower than in December of a year ago…the price index for energy commodities was 4.3% higher in December, while the price index for energy services was 0.8% higher, after the energy services price index had slipped by 0.1% in November….the energy commodities index was up 4.3% on a 4.4% increase in the price index for gasoline and a 4.4% increase in the price index for fuel oil, while prices for “other energy commodities”, including propane, kerosene, and firewood, averaged 0.2% lower …within energy services, the price index for utility gas service was 2.4% higher in December, after being 1.0% higher in November, and is now 4.9% higher than it was a year ago, while the electricity price index was 0.3% higher in December, after being 0.4% lower in November…. energy commodities are still averaging 3.9% below their year ago levels, with gasoline prices averaging 3.4% lower than they were a year ago, while the energy services price index is now up 3.3% from last December, as electricity prices are now averaging 2.8% higher than a year ago…

Meanwhile, the seasonally adjusted food price index was 0.3% higher in December, after being 0.4% higher in November, 0.2% higher in October, 0.4% higher in September, 0.1% higher in August, 0.2% higher in July, 0.2% higher in June, 0.1% higher in May, unchanged in April, 0.1% higher in March, unchanged in February, 0.4% higher in January, and 0.2% higher in December of last year, as the price index for food purchased for use at home was 0.3% higher in December, after being 0.5% higher in November. 0.1% higher in October, 0.4% higher in September, and 0.1% higher in June, July and August, while the price index for food bought to eat away from home was also 0.3% higher, as average prices at fast food outlets rose 0.4% and average prices at full service restaurants rose 0.​2%, while the price index for food at elementary and secondary schools rose 0.1%, and prices of other food away from home also averaged 0.1% higher…

In the food at home categories, the price index for cereals and bakery products was 1.2% higher, as bread prices rose 0.7%, the price index for flour and prepared flour mixes rose 1.8%, the price index for rice, pasta, and cornmeal rose 1.5%, price index for fresh biscuits, rolls, muffins rose 1.7%, and the price index for frozen and refrigerated bakery products, pies, tarts, turnovers was 1.9% higher.…at the same time, the price index for the meats, poultry, fish, and eggs food group was 0.6% higher, as the price index for beef and veal rose 0.5%, the price index for processed fish and seafood rose 1.2%, and egg prices were 3.2% higher….in addition, the seasonally adjusted price index for dairy products was 0.2% higher, even as average milk prices fell 0.1%, as the price index for cheese and related products was 0.7% higher….on the other hand, the fruits and vegetables price index was 0.2% lower, as the price index for fresh fruits fell 1.1%, price index for frozen fruits and vegetables fell 0.7%, and the price index for processed fruits and vegetables other than canned or frozen averaged 0.5% lower…in addition, the beverages price index was 0.4% lower, as the price index for carbonated drinks fell 2.0% and the price index for frozen noncarbonated juices and drinks fell 2.7%, while the price index for coffee was 1.0% higher….lastly, the price index for the ‘other foods at home’ category was 0.3% higher, as the price index for sugar and sweets rose 0.7%, the price index for soups rose 1.5%, the price index for baby food and formula rose 0.4%, and the price index for salt and other seasonings and spices was 2.1% higher…

Among the seasonally adjusted core components of the CPI, which rose by 0.2% in December, after rising by 0.3% in August, September, October and November, by 0.2% in July, by 0.1% in June, by 0.2% in May, by 0.3% in April, by 0.4% in March, by 0.4% in February, by 0.4% in January, and by 0.3% last December, the composite price index of all goods less food and energy goods was 0.1% higher in December, while the more heavily weighted composite index for all services less energy services was 0.3% higher….

Among the goods components of the core price index, which will initially be used by the Bureau of Economic Analysis to adjust December's retail sales for inflation in national accounts data, the price index for household furnishings and supplies was 0.2% lower, as the price index for living room, kitchen, and dining room furniture fell 0.7%, the price index for bedroom furniture fell 1.4%, the price index for major appliances fell 4.9%, and the index for other appliances was 1.8% lower…on the other hand, the apparel price index was 0.1% higher on a 1.9% increase in the price index for men’s suits, sport coats, and outerwear, a 3.6% increase in the price index for women’s dresses, a 4.3% increase in the price index for women’s outerwear, a 1.1% increase in the price index for women’s footwear, and a 0.6% increase in the price index for infants' and toddlers' apparel….at the same time, the price index for transportation commodities other than fuel was was 0.7% higher, as average prices for new vehicles rose 0.5%, the price index for used cars and trucks rose 1.2% and the price index for tires was 0.4% higher…meanwhile, the price index for medical care commodities was unchanged  in December​ as the price index for prescription drugs was unchanged, the price index for nonprescription drugs rose 0.8%, and the price index for medical equipment and supplies was 1.0% lower…at the same time, the recreational commodities index 0.5% lower, as the price index for TVs fell 0.5%, the price index for audio equipment fell 3.8%, the price index for sports vehicles including bicycles fell 0.5%, the price index for photographic equipment fell 1.2%, the price index for newspapers and magazines fell 1.6%, and the price index for toys was 1.0% lower…in addition, the education and communication commodities index was 0.9% lower, on a 1.1% decrease in the price index for college textbooks. a 0.9% decrease in the price index for computers, peripherals, and smart home assistants, a 3.0% decrease in the price index for computer software and accessories, and a 0.9% decrease in the price index for telephone hardware, calculators, and other consumer information items, led by a 1.7% decrease in the price index for smartphones.…lastly, a separate price index just for alcoholic beverages was 0.3% lower, while the price index for ‘other goods’ was 0.4% lower. on a 1.1% decrease in the price index for cosmetics, perfume, bath, nail preparations and implements and a 1.0% decrease in the price index for hair, dental, shaving, and miscellaneous personal care products…

Within core services, the price index for shelter was 0.3% higher, as rents rose 0.3%, and homeowner’s equivalent rent rose 0.3%, while prices for lodging away from home at hotels and motels were 1.0% lower and the price index for household insurance was unchanged, while the price index for water, sewers and trash collection was 0.1% higher, while the price index for moving, storage, and freight expense was 1.3% lower… at the same time, the price index for medical care services was 0.2% higher, as the price index for nursing homes and adult day services rose 0.5%, the price index for services by medical professionals other than doctors and dentists rose 0.3%, and the price index for outpatient hospital services was 0.3% higher….in addition, the transportation services price index was 0.5% higher, as the price index for motor vehicle body work rose 2.8%, the price index for motor vehicle maintenance and servicing rose 0.7%, the price index for motor vehicle insurance rose 0.4%, the price index for car and truck rental rose 0.6%, the price index for airline fares rose 3.9%, and the price index for intercity transportation other than by air was 3.7% higher….meanwhile, the recreation services price index was 0.4% higher, as the price index for purchase, subscription, and rental of videos rose 1.3%, the price index for admission to movies, theaters, and concerts rose 0.7%. the price index for fees for lessons or instructions rose 0.5%, and the price index for cable, satellite, and live streaming television service was 0.7% higher….in addition, the price index for education and communication services was 0.2% higher, as the price index for delivery services rose 1.9%, the price index for internet services and electronic information providers rose 0.4%, and the price index for residential telephone services was 0.7% higher…lastly, the index for other personal services was 0.5% lower, as the price index for financial services fell 2.1%, and the price index for apparel services other than laundry and dry cleaning was 0.3% lower..

Retail Sales Rose 0.4% in December; PCE Goods to Add 121 Basis Points to Q4 GDP

Seasonally adjusted retail sales increased in December after upward revisions to retail sales for October and November… The Advance Retail Sales Report for December(pdf) from the Census Bureau estimated that our seasonally adjusted retail and food services sales totaled $729.2 billion during the month, which was 0.4 percent (±0.5%) higher than November’s revised sales of $725.9 billion, and was 3.9 percent (±0.5 percent) above the adjusted sales in December of last year…November’s seasonally adjusted sales were revised less than 0.2% higher, from $724.6 billion to $725.9 billion, while October’s sales were revised less than 0.1% higher, from $719.7 billion to $720.4 billion; as a result, the November sales change was revised from up 0.7 percent (±0.5 percent) to up 0.8 percent (±0.3 percent) from October…..for the entire year, sales totaled $8,544.4 billion, 3.0 percent (±0.4 percent) higher than the sales of the 12 months of 2023….estimated unadjusted sales, extrapolated from surveys of a small sampling of retailers, indicated December’s actual sales rose 7.5%, from $739,370 million in November to $794,912 million in December, while they were up 3.8% from the $765,846 million of sales in December a year ago, so we can see how the large December seasonal adjustment knocked the big holiday sales increase down to a modest print…

Since it’s the end of the quarter and the end of the year for retail sales, we’ll include the entire table from this report showing retail sales by business type, including the quarter over quarter data…again, to explain what this table shows, the first double column below shows us the seasonally adjusted percentage change in sales for each kind of business from the November revised figure to this month’s December “advance” figure in the first sub-column, and then the year over year percentage sales change since last December in the 2nd column; the second double column pair below gives us the revision of the November advance estimates (now called “preliminary”) as of this report, with the new October to November percentage change under ​the “Oct 2024 r” (revised)​ heading and the November 2023 to November 2024 percentage change as revised in the 2nd column of that middle pair​, under ​“Nov 2023 r” (for your reference, the table from the advance estimate of November sales, before this month’s revisions, is here)…. Then, the third pair of columns shows the percentage change of the most recent 3 months of this year’s sales (October, November and December) from the preceding three months of the 3rd quarter (July, August and September) and then from the same three months (October, November and December) of a year earlier….that first column of the last pair thus gives us a snapshot comparison of 3rd quarter sales to fourth quarter sales, which could be useful in estimating the impact of retail sales on 4th quarter GDP, after those sales are adjusted for price changes…

To compute December’s real personal consumption of goods data for national accounts from this December retail sales report, the BEA will initially use the corresponding price changes from the December consumer price index, which we reviewed above…to estimate what they will find, we’ll first separate out the volatile sales of gasoline from the other totals…from the third line on the above table, we can see that December retail sales excluding the 1.5% price-related increase in sales at gas stations were also up by 0.4%….Then, subtracting the figures representing the 0.8% increase in grocery & beverage sales and the 0.3% decrease in food services sales from that total, we find that core retail sales were up by more than 0.4% for the month…since the CPI report showed that the composite price index for all goods less food and energy goods was 0.1% higher in December, we can thus estimate that real retail sales​, excluding food and energy sales​, will also show an increase of 0.3%… however, the actual adjustment for each of the types of sales shown above will vary by the change in the related price index…for instance, while nominal sales at motor vehicles and parts dealers were up 0.7%, the price index for transportation commodities other than fuel also increased by 0.7%, which would suggest that real sales at motor vehicles and parts dealers were ​v​irtually unchanged…in like manner, while nominal sales at clothing stores were 1.5% higher in December, the apparel price index was 0.1% higher, which would mean that real sales of clothing rose by around 1.4%.…similarly, while nominal sales at furniture stores were up 2.3%, the price index for household furnishings and supplies was 0.2% lower, which would suggest that real sales at furniture stores rose by about 2.5%..

In addition to figuring those core retail sales, to make a complete estimate of real December PCE, we’ll need to adjust food and energy retail sales for their price changes separately, just as the BEA will do.…The CPI report showed that the food price index was 0.3% higher in December, with the index for food purchased for use at home 0.3% higher and prices for food bought to eat at restaurants also 0.3% higher… hence, with nominal sales at food and beverage stores 0.8% higher, part of that was due to higher prices, so real sales of food and beverages were about 0.5% higher…likewise, 0.3​% lower nominal sales at bars and restaurants, once adjusted for 0.3% higher prices, suggests that real sales at bars and restaurants fell about 0.6%…meanwhile, while sales at gas stations were up 1.5%, there was a 4.4% increase in the retail price of gasoline, which would suggest real sales of gasoline were down almost 2.8%, with the caveat that gasoline stations do sell more than gasoline, and those other sales should not be adjusted with gasoline prices….by weighing and averaging the real sales changes that we have thus estimated back together, and excluding food services, we can estimate that the income and outlays report for December will show that real personal consumption of goods rose by more than 0.1% for the month, after rising by an revised 0.9% in November, but after being unchanged in October, rising by 1.2% in September, and falling by 0.5% in August…at the same time, the 0.6% decrease in real sales at bars and restaurants would have a modest negative impact on December’s real personal consumption of services…

With those estimates for the relative change in real PCE goods between the months of the 3rd and the 4th quarter, we should be able to also estimate the change in PCE goods between those two quarters….by setting July’s real PCE goods as an index equal to 100, we can then say that August’s real PCE goods would be equal to 99.5, and from that, we’d get index values of 100.7 for September, 100.7 for October, 101.6 for November, and 101.7 for December….we then compute the quarter over quarter change in those index values at an annual rate to determine the probable change that would be applied to 4th quarter GDP… (((100.7 + 101.6 + 101.7 )/3) / ((100 + 99.5 + 100.7 )/3)) ^4 = 1.05160243, which means that real PCE goods are rising at an 5.16% annual rate over the fourth quarter, based on our very rough estimates for the percentage change between real PCE goods of the 3rd and the 4th quarter months….since real PCE goods has been running at 23.4% of GDP, that suggests that 4th quarter PCE goods would add roughly 1.21 percentage points to the growth rate of 4th quarter GDP…

NB: we have a low confidence in those estimates because our inflation adjustment on gas station sales suggests a sharp real decrease; if December’s real gasoline sales ​t​urn out to be simply unchanged, ​our estimate would show that December real personal consumption of goods would have risen by nearly 0.4%, and the 4th quarter’s PCE growth rate would be 5.53%….

Industrial Production Rose 0.9% in December After November’s Output was Revised 0.3% Higher

The Fed’s G17 release on Industrial production and Capacity Utilization indicated that seasonally adjusted industrial production increased by​ 0.9% in December, after November’s output ​change was revised from a 0.1% decrease to a 0.2% increase, which together meant that industrial production still fell at an 0.8% annual rate in the 4th quarter, and thus finished the year just 0.5% higher than a year earlier….the industrial production index, with the benchmark set for average 2017 production to equal to 100.0, rose to 103.2 in December from 102.3 in November, which was revised from the 102.0 reported for November last month, while the IP index for October remained at 102.1, the index for September was revised from 102.5 to 102.6, and the index for August was revised from 103.1 to 10​3.0…

The manufacturing index, which accounts for more than 73% of the total IP index, rose 0.6% to 99.3 in December, leaving the manufacturing index unchanged from a year ago, after the November manufacturing index was revised from 98.4 to 98.7, the October manufacturing index was revised from 98.​2 to 98.​3, the September manufacturing index was revised from 98.​9 to 9​9.0, and the August manufacturing index was revised from 9​9.4 to 9​9.​3….meanwhile, the mining index, which includes oil and gas well drilling, rose 1.8%, from 118.8 in November to 120.9 in December, after the November mining index was revised up from 118.2, still leaving the mining index at a level just 0.3% higher than it was a year earlier…finally, the seasonally adjusted utility index, which often fluctuates due to above or below normal temperatures, rose by 2.1% in our cold December, from 105.3 to 107.5, after the November utility index was revised down from 105.6, but was still a 0.7% decrease from October…since December 2023 was a closer to normal month, the utility index is now 4.3% above where it was a year ago…

This report also includes capacity utilization data, which is expressed as the percentage of our plant and equipment that was in use during the month, and which indicated that seasonally adjusted capacity utilization for total industry rose to 77.6% in December from 77.0% in November, after capacity utilization for November was revised up from the 76.8% utilization ​rate reported last month…capacity utilization of NAICS durable goods production facilities rose from an upwardly revised 73.8% in November to 74.0% in December, while capacity utilization for non-durables producers rose from an upwardly revised 78.7% to 79.2%…capacity utilization for the mining sector rose to 90.8% in December from 89.2% in November, which was originally reported as 88.8%, while utilities were operating at 71.1% of capacity during December, up from 69.8% of capacity during November, which was previously reported at 70.0%…for more details on capacity utilization by type of manufacturer, see Table 7: Capacity Utilization: Manufacturing, Mining, and Utilities, which shows the historical capacity utilization figures for a dozen types of durable goods manufacturers, 8 classifications of non-durable manufacturers, mining, utilities, and capacity utilization for a handful of other special categories….

Producer Prices Rose 0.2% in December on Higher Energy and Transportation Costs

The seasonally adjusted Producer Price Index (PPI) for final demand was 0.2% higher in December, as the final demand price index for wholesale goods rose 0.6% while the price index for final demand for services was unchanged…that December PPI increase followed a 0.4% increase in November, when final demand prices for wholesale goods rose 0.7% and the price index for final demand for services was 0.3% higher, a downwardly revised 0.2% PPI increase in October, when the final demand price index for wholesale goods rose 0.1% and the price index for final demand for services was 0.3% higher, an unrevised 0.2% increase in September, when the price index for finished wholesale goods was 0.3% lower, but the price index for final demand for services was 0.5% higher, an unrevised 0.3% increase in August, when prices for finished wholesale goods averaged unchanged, while the price index for final demand for services was 0.5% higher, an unrevised and unchanged PPI index in July, when the price index for finished wholesale goods rose 0.6%, while the price index for final demand for services was 0.2% lower, a 0.4% increase in June, when the price index for finished wholesale goods fell 0.3% but the price index for final demand for services was 0.7% higher, and followed an unrevised and unchanged May index, when an 0.8% decrease in the price index for finished wholesale goods was offset by a 0.4% increase in the price index for final demand for services, a 0.5% PPI increase in April, when the price index for finished wholesale goods rose 0.4% while the price index for final demand for services was 0.6% higher, an unrevised and unchanged PPI index in March, when the price index for wholesale goods fell 0.2% and the price index for final demand for services was 0.1% higher, an unrevised 0.6% PPI increase in February, when the price index for wholesale goods rose 1.1% and the price index for final demand for services was 0.3% higher, an unrevised 0.4% PPI increase in January, when the price index for finished wholesale goods fell 0.1%, while the price index for final demand for services was 0.6% higher; and a 0.1% PPI decrease last December, when the index for prices of wholesale goods was 0.1% lower and the price index for final demand for services was also 0.1% lower….on an unadjusted basis, producer prices are now 3.3% higher than a year ago, while the core producer price index, which excludes food, energy and trade services, was just 0.1% higher for the month, and is also 3.3% higher than it was a year ago…

As noted, the producer price index for final demand for goods was 0.6% higher in December, after being 0.7% higher in November, 0.1% higher in October, 0.3% lower in September, unchanged in August, 0.6% higher in July, 0.3% lower in June, 0.8% lower in May, 0.4% higher in April, 0.2% lower in March, 1.1% higher in February, 0.1% lower last January, and 0.1% lower last December, and is now 1.8% higher than a year ago….the final demand goods price index was 0.6% higher in December as the price index for wholesale energy goods was 3.5% higher, after it had been unchanged in November, risen by 0.4% in October, after falling by 2.9% in September and by 1.0% in August, ​w​hile the price index for wholesale foods was 0.1% lower, after it had been up 2.9% in November, down 0.1 in October, up 0.8% in September, up 0.3% in August, up 0.6% in July, ​and up 0.1% in June, while the index for final demand for core wholesale goods (excluding food and energy) was unchanged in December after being 0.2% higher in November, and 0.1% higher in October and in September…

Wholesale energy prices were up 3.5% in November on a 9.7% increase in wholesale prices for gasoline, a 4.2% increase in wholesale prices for liquefied petroleum gas, and a 4.0% increase in wholesale prices for home heating oil and distillates, while the final demand for food price index was 0.1% lower on a 14.7% decrease in the wholesale price index for fresh and dry vegetables, a 1.8% decrease in the wholesale price index for dairy products, a 1.5% decrease in the wholesale price index for oilseeds, and a 1.0% decrease in the wholesale price index for finfish and shellfish…. among core wholesale goods, the wholesale price index for sanitary paper products rose 1.2% and the wholesale price index for industrial chemicals rose 0.4%, while the wholesale price index for carbon steel scrap fell 11.8% and the wholesale price index for household appliances was 1.3% lower…

Meanwhile, the price index for final demand for services was 0.2% higher in November, after being 0.3% higher in November, 0.3% higher in October, 0.5% higher in September, 0.5% higher in August, 0.2% lower in July, 0.7% higher in June, 0.4% higher in May, 0.6% higher in April, 0.1% higher in March, 0.3% higher in February, and 0.6% higher in January, after being 0.1% lower last December, and is now 4.0% higher than a year ago…the price index for final demand for trade services fell 0.1%, but the price index for final demand for transportation and warehousing services rose 3.3%, while the core index for final demand for services other than trade, transportation, and warehousing services was 0.2% lower….

Among trade services, seasonally adjusted margins for computer hardware, software, and supplies retailers were 3.0% lower, margins for major household appliances retail​ers were 2.0% lower, margins for sporting goods, including boats retailers fell 1.9%, margins for furniture retailers fell 1.9%, margins for apparel wholesalers fell 1.7%, and margins for ood and alcohol wholesaling were 1.7% lower, while margins for TV, video, and photographic equipment and supplies retailers rose 5.0% and margins for fuels and lubricants retailers 4.9% higher….among transportation and warehousing services, average margins for courier, messenger, and U.S. postal services were 1.1% higher, margins for truck transportation of freight were 0.5% higher,​ and margins for airline passenger services were 7.2% higher….among the components of the core final demand for services index, the price index for traveler accommodation services fell 6.9%, the price index for consumer loans (partial) fell 8.8%, and the price index for application software publishing was 1.9% lower…

This report also showed the price index for intermediate processed goods was 0.3% higher in December, after being unchanged in November, 0.4% higher in October, 0.9% lower in September, 0.1% lower in August, 0.6% higher in July, 0.1% lower in June, 1.4% lower in May, 0.5% higher in April, 0.6% lower in March, 1.4% higher in February, 0.1% lower last January, and 0.4% lower last December….the price index for intermediate energy goods rose 1.6% in December as refinery prices for gasoline rose 9.7%, producer prices commercial natural gas rose 3.9%, producer prices for industrial electric power rose 1.9%, the producer price index for industrial natural gas rose 1.9%, and the producer price index for liquefied petroleum gas was 4.2% higher….at the same time, the price index for intermediate processed foods and feeds rose 0.4%, as the producer price index for meats rose 2.1%, the producer price index for processed fruits and vegetables rose 0.5%, and the producer price index for prepared animal feeds was 0.7% higher….meanwhile, the core price index for intermediate processed goods less food and energy goods was unchanged, as the producer price index for asphalt rose 16.0%, the producer price index for building paper and board rose 4.4%, and the producer price index for ball and roller bearings rose 2.3%, while the producer price index for steel mill products fell 3.0%, the producer price index for copper and brass mill shapes fell 2.3%, and the producer price index for nonferrous wire and cable fell 1.8%….average prices for intermediate processed goods were 0.2% higher than in December 2023, ​just the 2nd year over year increase in 22 months, and are thus still way down from their 26.6% year over year increase of November 2021, which had been a 46 year high…

Meanwhile, the price index for intermediate unprocessed goods rose 3.2% in December, after rising 0.1% in November, rising 2.4% in October, falling 1.6% in September, falling 3.3% in August, rising 2.0% in July, rising 0.6% in June, after being unchanged in May, rising 2.1% in April. falling 1.4% in March and 0.3% in February, after rising 1.4% last January, and after falling by 4.1% last December….that was as the December price index for crude energy goods rose 10.0%, as crude oil prices rose 0.5% unprocessed natural gas prices rose 57.7%, and coal prices were 0.2% higher…meanwhile. the price index for unprocessed foodstuffs and feedstuffs was 0.2% higher, on a 2.4% increase in producer prices for wheat, a 3.0% increase in producer prices for slaughter cattle, and a 25.4% increase in producer prices for hay and hayseeds….on the other hand, the index for core raw materials other than food and energy materials was 1.8% lower, on an 11.7% decrease in the price index for carbon steel scrap, a 4.3% decrease in the price index for recyclable paper, a 1.7% decrease index for aluminum base scrap, and a 3.0% decrease in the price index for nonferrous metal ores….this raw materials price index is now 5.1% higher than a year ago, the 3rd year over year increase in the past 23 months, which followed twenty-seven consecutive year over year increases, which came after the annual change on this index had been negative from the beginning of 2019 through October of 2020…

Lastly, the price index for services for intermediate demand was 0.4% higher in December, after being 0.3% lower in November, 0.2% higher in October, 0.2% higher in September, 0.1% higher in August, 0.3% higher in July, 0.4% higher in June, 0.3% higher in May, 0.2% higher in April, 0.2% higher in March, unchanged in February, 0.9% higher in January, and 0.5% higher last December…the price index for intermediate trade services was 0.1% higher, as margins for chemicals and allied products wholesalers rose 1.7%, margins for paper and plastics products wholesalers rose 0.4%, and margins for intermediate hardware, building material, and supplies retailers rose 0.5%….at the same time, the price index for transportation and warehousing services for intermediate demand was 0.9% higher, as the intermediate price index for courier and messenger services, except air mail, rose 1.5%, the intermediate price index for transportation of passengers rose 7.2%, and the intermediate index for air mail and package delivery services, excluding by USPS​, rose 2.2%….at the same time, the core price index for intermediate services other than trade, transportation, and warehousing services was 0.4% higher, as the intermediate price index for deposit services (partial) sales rose 4.9%, the intermediate price index for investment banking also rose 4.9%, the intermediate price index for advertising space sales in directories and mail lists rose 2.3% and the intermediate price index for passenger car rental was 2.6% higher…over the 12 months ended in December, price index for services for intermediate demand was 3.0% higher than it was a year ago, the fiftieth consecutive annual increase in this index, after it had briefly turned negative year over year at the onset of the pandemic, from April to August of 2020, even as the current annual increase is still much lower than the record 9.5% year over year increase that’s indicated for July 2021…

November Business Sales Rose 0.5%, Business Inventories Rose 0.1%

After the release of the December retail sales report, the Census Bureau released the composite Manufacturing and Trade, Inventories and Sales report for November (pdf), which incorporates the revised November retail data from that December report and the earlier published November wholesale and factory data to give us a complete picture of the business contribution to the economy for that month….according to the Census Bureau, total manufacturer’s and trade sales were estimated to be valued at a seasonally adjusted $1,893.1 billion in November, up 0.5% (±0.2 percent) from October’s revised sales, and up 2.5 percent (±0.4 percent) from November sales of a year earlier…note that total October sales were concurrently revised from the previously reported $1,883.0 billion to $1,882.8 billion, but are still virtually unchanged from September….manufacturer’s sales rose 0.1% to $586,332 million in November; retail trade sales, which exclude restaurant & bar sales from the revised November retail sales reported earlier, rose 0.9% to $628,727 million, and wholesale sales were 0.6% higher at $678,007 million..

Meanwhile, total manufacturer’s and trade inventories, a major component of GDP, were estimated to be valued at a seasonally adjusted $2,588.2 billion at the end of November, up 0.1 percent (±0.1 percent) from October, and 2.6 percent (±0.3 percent) higher than in November a year earlier…at the same time, the value of end of October inventories was revised from the $2,587.0 billion reported a month ago to $2,585.6 billion, now virtually unchanged from September…. seasonally adjusted inventories of manufacturers were estimated to be valued at $859,316 million, 0.3% higher than in October, and inventories of retailers were valued at $827,269 million, 0.2% higher than in October, while inventories of wholesalers were estimated to be valued at $901,592 million at the end of November, 0.2% lower than October…

For GDP purposes, all inventories, including retail, will be adjusted for inflation with appropriate component price indices of the producer price index for November, which averaged 0.7% higher for finished goods; hence most of November’s real inventories would be lower….last week, we looked at real factory inventories with price adjustments for goods at various stages of production, and judged the real decrease in those inventories, plus the small third quarter increase would be subtracted from 4th quarter GDP…also last week, we found that the 4th quarter real wholesale inventory decrease would reverse a modest 3rd quarter increase and also subtract the 4th quarter decrease from the growth rate of 4th quarter GDP….since nominal retail inventories for November have now been shown to be 0.2% higher, real retail inventories for the month, considering the 0.7% finished goods price adjustment, would have thus been down about 0.5% from October, after a real 0.1% increase in that month…since the third quarter saw a substantial increase in real retail inventories (a $57.5 billion annual rate in 2017 dollars), the modest real inventory decrease we now have indicated for the 4th quarter months would reverse that large 3rd quarter increase and also subtract the 4th quarter increase from the growth rate of 4th quarter GDP…

Housing Starts Reported 15.8% Higher in December; Permits 0.7% Lower

The December report on New Residential Construction (pdf) from the Census Bureau estimated that the number of new housing units started in December was at a seasonally adjusted annual rate of 1,499,000, which was 15.8 percent (±14.4 percent) above the revised November estimated annual rate of 1,294,000 housing units started, but was 4.4 percent (±11.3 percent)* below last December’s annual rate of 1,568,000 housing starts….the asterisk indicates that the Census does not have sufficient data to determine whether housing starts actually rose or fell over the past year, with the figures in parenthesis the most likely range of the change indicated; in other words, December housing starts could have been up by 1.4% or up by as much as 30.2% from those of November, with revisions of a greater magnitude in either direction possible…in this report, the annual rate for November’s housing starts was revised from the 1,289,000 reported last month up to 1,294,000, while October starts, which were first reported at a 1,311,000 annual rate, were revised from last month’s initial revised figure of 1,312,000 annually up to a 1,344,000 annual rate with this report….

Those annual rates of starts reported here were extrapolated from a survey of a small percentage of US building permit offices visited by canvassing Census field agents, which estimated that roughly 106,000 housing units were started in December, up from the 98,200 units that were started in November, but down from the 115,100 units that were started in October…of those housing units started in December, an estimated 71,800 were single family homes and 31,800 were units in structures with more than 5 units, down from the revised 76,000 single family starts in November, but up from the 21,000 units started in structures with more than 5 units in November…

The monthly data on new building permits, with a smaller margin of error, are probably a better monthly indicator of new housing construction trends than the volatile and often revised housing starts data….in December, Census estimated that new building permits for housing units were being issued at a seasonally adjusted annual rate of 1,483,000, which was 0.7 percent below the revised November rate of 1,493,000 permits, and 3.1 percent below the rate of building permit issuance in December a year earlier,…the annual rate for housing permits issued in November was revised down from the originally reported 1,505,000….

Again, the annualized estimates for new permits reported here were extrapolated from the unadjusted estimates collected monthly by canvassing census agents, which showed permits for 112,900 housing units were issued in December, up from the revised estimate of 107,300 new permits issued in November….the December permits included 68,000 permits for single family homes, up from 66,600 single family permits issued in November, and 40,800 permits for housing units in apartment buildings with 5 or more units, up from 36,800 such multifamily permits a month earlier…for graphs and commentary on this report, see the following posts by Bill McBride at Calculated Risk: Housing Starts Increased to 1.499 million Annual Rate in December and the identically titled Housing Starts Increased to 1.499 million Annual Rate in December…

 

 

(the above is the synopsis that accompanied my regular sunday morning news links emailing, which in turn was mostly selected from my weekly blog post on the global glass onion…if you’d be interested in receiving my weekly emailing of selected links, most of which are picked from the aforementioned GGO posts, contact me…)